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29 Nov 2018

The impact of an ageing workforce

Charles Cotton talks through the findings of the CIPD’s Reward Management Survey

CIPD Voice: Issue 16

Last month, the CIPD, in association with LCP, released its 2018 reward management survey, which focused on the provision of employee benefits within the UK. Nearly 570 HR professionals responded to the survey on behalf of their employers from a variety of sectors and employment sizes.

One of the questions in our survey asked participants was whether they expected the ageing population would have an impact on their people management policies and processes in the next five years. Just over half (52%) of respondents predicted that it would.

The survey finds that it is in both the manufacturing and the public sectors where this prediction is highest (62% and 73% of respondents respectively, as opposed to 44% and 46% of private services and voluntary sector organisations). This finding may be due to the age profile of these employers, since in 83% of public sector respondents at least half of the managers are aged 50 or over, and in 74% of public sector organisations at least half of the non-managers are aged 50 or over. This makeup is also seen in the manufacturing sector, though to a lesser extent (64% at both levels).

Within the private sector, the retail, hospitality, catering, leisure and cleaning sub-sector is the least likely of all to expect to be impacted by an ageing population (38%), which also reflects the age range of such organisations, which in general employ fewer over-50s than the other sectors.

We then followed this up with a question that asked respondents to predict which aspects of their organisation’s people management policies and processes would need to change the most to meet the challenge of an ageing population over the next five years. The most commons expectation are that policies and processes in the following areas will have to adapt the most: the design of work, jobs and working hours (61% of all those predicting that they will be impacted by an ageing workforce); recruitment and selection (53%); staff physical and mental well-being (53%); and management and development of staff performance (32%).

Interestingly, while just 9% predict that how they manage pay levels, structures and progression will need to change, three times more (27%) think that they’ll have to adapt their existing approach to employee benefits, especially in the private services sector, possibly reflecting an issue with those benefits where there is a link between cost and age.

In the manufacturing sector, 76% of respondents think that that policies and procedures associated with the design of jobs, work and working hours will have to change the most, possibly reflecting the physical nature of many tasks in that sector. This compares with only 49% of respondents in private sector services who believe the same.

In private sector services, job and work design and working hours are expected to be less impacted by an ageing population than they are in the other sectors, possibly reflecting that some of these roles may be less physically demanding. The retail, hospitality, catering, leisure and cleaning sector are the least likely (33%) of any sector to think that recruitment and selection will need to change because of an ageing population. While this sub-sector does not predict that employee pay management will need to change 80% of them believe that for how staff physical and mental well-being is promoted (by far the highest proportion of any sector) will have to change.

People professionals have a key role in helping their organisations respond to both the challenges and opportunities of an ageing workforce, especially in terms of how the design of work and jobs will need to adapt.

Interestingly, while few respondents think that their current approach to performance management and development will need to change, even fewer think that they will need to change their approach to pay.

However, in those organisations where pay and employee performance are linked, reward professionals will need to explore how achievement will be defined, measured, developed and remunerated in the future, as the organisation, work and tasks are redesigned to take advantage of the new demographic prospects.

Investors will be interested in how employers are preparing for an ageing workforce. They will want to know whether the people policies and practices exist to take advantage of a maturing workforce. If not, then their investments may be at risk.

Government also has a role in encouraging employers to consider the new demographic realities, especially post Brexit. For instance, supporting small firms through the provision of information, advice and guidance around designing jobs, work and working hours that help more older employees remain in the workplace.

Charles Cotton, Research and Policy Adviser, Performance and Reward

Charles has recently led research into the business case for pensions, how front line managers make and communicate reward decisions, and managing reward risks, as well as the creation of a good practice guide on the annual pay review process. He is also responsible for the CIPD’s public policy work in the area of reward and is a Chartered Fellow of the CIPD.